Considering the challenges associated with the energy transition, demand-side participation (DSP) emerges as an attractive approach for enhancing system flexibility and efficiency. This paper analyses, through system dynamics, how active DSP can contribute to improved inclusion of renewables in the electricity market when supported by policy that favours the effective participation of consumers. The analysis is conducted considering technical, environmental, and financial features, including indicators such as load curve variations, polluting emissions, consumer savings and costs related to public policy implementation. This analysis is carried out within the context of developing countries, which are characterized by low DSP and a lack of supporting technologies. In this research, the Colombian electricity market is used as case study. The findings include that DSP can provide a significant contribution to system efficiency by both improving the operation of the load curve, and, importantly, by increasing the participation of renewables in the market through distributed generation systems. The results also show that active DSP leads to reductions in greenhouse gas emissions and financial benefits for society, including bill savings for users. These benefits can be further enhanced when regulators effectively promote DSP through policies that promote the diffusion of alternative options for user participation.